A Fed rate hike won’t fix an oil price problem, veteran broker argues

“Even though the Fed hasn’t moved interest rates at all, you notice mortgage prices increasing,” he said. “The reason why mortgage rates are going up is because the long bonds are reacting to the inflationary environment and the uncertainty. When the war calms down, you will see the 10-year treasury fall, and when that falls, mortgage rates will come down.”

Nurani said he understood why there were so many headlines about potential rate hikes. It comes back to the fundamental understanding of what the central bank usually does to take care of issues when its mandates get out of alignment. However, this situation is a bit different, and understanding it takes a little more digging.

“It’s a very elementary understanding of the problem,” he said. “The entire nation understands inflation equals high rates. Most of the market goes, oh, inflation’s hot, it’s going to vary rates, no doubt about it. And honestly, 90% of the time it might be. But in this little nuance where you have extrinsic variables that have nothing to do with our core economy, these same principles don’t apply.”

Media headlines play a part as well, as any headline predicting a rate move is going to get more attention than what can be perceived as another boring hold.

“The rising interest rates headline is going to get way more clicks than the opposite,” he said. “So it’s easy to have that opinion and see it supported when you see inflation go up. But when you understand this a little bit more intimately, you kind of step back and go, yeah, that’s not what’s going to happen.”